How skyrocketing inflation has hit Pakistan’s most vulnerable
With Ramadan approaching, millions of Pakistanis are struggling to put food on the table amid one of country’s worst economic crises.
Islamabad, Pakistan – A sick daughter, growing debt and skyrocketing inflation reaching record levels – faced with a situation like this, Sakina Bibi had to make some tough decisions.
“My daughter Sana was recently diagnosed with cancer. I don’t have enough money to get her treated as well as send my son Ali to school. So, I took him out of school, and now he stays at home and looks after his sister, while I do whatever I can,” said the 52-year-old, a maid in Islamabad.
The mother-of-three works at three different houses to try to make ends meet, earning 30,000 rupees a month ($107) – just above Pakistan’s minimum wage of $90.
“Ali is 14, he can go to school later. He can maybe learn to do something. But I cannot lose my firstborn,” said Bibi, who has separated from her husband. “I am under debt of 200,000 rupees ($717) due to her treatment but I must do what I can as a mother to save her.”
Much like Bibi, Ghulam Murtaza Abbasi also had to make difficult calls as Pakistan faces one of the worst economic crises of its history.
The 59-year-old used to be a labourer in his hometown of Murree, a hilly area on the outskirts of Islamabad. But he had to relocate to Islamabad four months ago to work as a security guard to continue supporting his wife and five children.
He found a job at a petrol station, a post which he admits he got only through the help of an acquaintance. “Otherwise, who would give job to a frail, old man,” he said.
Abbasi works seven days a week and earns a monthly salary of 28,000 rupees ($100), 70 percent of which he sends to his family back in Murree. He said he would not go home for Eid al-Fitr – the Muslim festival marking the end of the upcoming fasting month of Ramadan – to continue earning money for his family.
“There is no off days for us,” he said.
“I am lucky that the company provides us accommodation, otherwise I’d be left with nothing. Even now, only three of my children go to school because I cannot afford to send the other two.”
Just two weeks before the start of Ramadan, Bibi and Abbasi are among the millions of Pakistanis toiling to put food on the table amid a deepening cost of living crisis that has hit the country of 220 million people.
Struggling to keep the economy afloat, the government has been desperate to reach an agreement with the International Monetary Fund (IMF) to resume a $6.5bn loan programme that has been essentially suspended since last November. The IMF has put forward a set of demands for the release of a $1.1bn instalment that includes the liberalisation of the exchange rate, the removal of subsidies in various sectors and raising taxes.
The two sides held formal negotiations for 10 days in early February, and the government has gradually fulfilled most of the conditions set by the fund. However, in a country where about a quarter of the population lived below the poverty line even before the current crisis, many are struggling to meet their basic needs.
Inflation last month surged to 31.5 percent, its highest level since 1974, according to the latest figures released by the Pakistan Bureau of Statistics on March 1.
The news sent the rupee tumbling the following day, with the currency losing more than 6 percent of its value against the United States dollar in a single day. The rupee had already shed nearly 20 percent in January after Pakistan abandoned controls on its currency exchange rate to meet IMF conditions.
Also on March 2, the central bank hiked interest rates to 20 percent, a nearly three-decade high, in an attempt to stem rapidly surging inflation.
“Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with IMF are about to conclude and we expect to sign Staff Level Agreement with IMF by next week,” Ishaq Dar, the beleaguered finance minister, tweeted that day. “All economic indicators are slowly moving in the right direction.”
due payments on time. Foreign commercial banks have started extending facilities to Pakistan. Our negotiations with IMF are about to conclude and we expect to sign Staff Level Agreement with IMF by next week. All economic indicators are slowly moving in the right direction. 2/2
— Ishaq Dar (@MIshaqDar50) March 2, 2023
Economist Ammar Habib Khan warned of tough days ahead due to the depreciating rupee and the increased demand that will take place during Ramadan when the breaking of the dawn-to-sunset fasting is typically a period of celebration.
“The government instead of taking cosmetic measures of ‘price controls’, which never work, should work on war footing to streamline supply chains so that there are no shortages, and eventually no shortage-driven price hike in Ramadan,” he said.
Ayesha Khan, the regional Director for Acumen Fund, a global non-profit, said she expected food prices to get even higher as the fasting month approaches.
“Due to the overall macro inflation impact on the economy, as always, the most vulnerable segments of the society will be hit the hardest. The government must focus on reducing price volatility as well as ensure social safety nets for the vulnerable are robust,” she said.
Already, people have been feeling the pain.
“We used to have close to 10,000 people coming to our almshouses every day [for free food], but in the last few months, the figure has easily gone beyond 13,000 at least,” said Faisal Ahmed Mir, manager of a welfare trust in Islamabad which runs 18 such facilities in the city.
Mir said labourers who previously could buy food at small roadside cafés could not do it any more.
“A single piece of flatbread used to be for 10 rupees ($0.036) but now it is going for almost 30 rupees, ($0.11). People coming here cannot afford to buy meals any more,” he said.
Muhammed Waheed, a 45-year-old roadside barber, said last year a patron had bought him groceries for the whole month of Ramadan, a period when Muslims are encouraged to help those less privileged with charity work and donations.
This year, however, Waheed does not what he will do for his family of six.
“Eid is always a difficult time. Children look up to us for giving them new toys or clothes. Yet we are struggling with what to eat daily; how can I promise to buy them new clothes?” he told Al Jazeera.